New water rate structure needed, committee says

The city's environment committee endorsed a plan Tuesday to develop a new approach to billing for water and sewer services in Ottawa that is intended to be, in words of chair David Chernushenko, "fair, equitable and financially sustainable."

The city’s environment committee endorsed a plan Tuesday to develop a new approach to billing for water and sewer services in Ottawa that is intended to be, in words of chair David Chernushenko, “fair, equitable and financially sustainable.”

A new billing model is needed because the current one — which bills customers a single rate based on the volume of water consumed — is essentially broken.

Ottawa, like other places in Ontario, has seen a decrease in water use in recent years due to various conservation efforts. Despite an increase in the number of households being serviced, total consumption has fallen 14 per cent between 2005 and 2014. The city is now using the same amount of water that it did in 1980.

Yet whether residents use a cubic metre of water or a hundred cubic metres, the cost of maintaining the pipe infrastructure and water treatment facilities is the same. Reduced consumption means less revenue, which in turn means less money to maintain assets, some of which are more than 60 years old and need repair or replacement.

Ottawa is one of only four of the 25 larger municipalities in Ontario that still relies on this billing model.

Finding itself now at a crossroads, the city may ultimately decide to do what many others have done before it — switch to an approach that would include a base rate plus a variety of possible sliding scales depending on how much a household uses.

“Everybody is moving in the same direction,” city treasurer Marian Simulik told the committee.

“We’re not the only municipality that’s having revenue issues in terms of water.”

Simulik said staff will report back in early 2016 on all of the various models explored. Financial sustainability must be the guiding principle, the committee ruled, but fairness, affordability, transparency, conservation and economic develop were also deemed key principles.

“We will be as exhaustive as possible to come up with a different model,” Simulik said.

Any new billing approach could also see changes to the way stormwater services are funded. Currently, more than 45,000 properties without water meters don’t help pay for operating and maintaining the infrastructure needed to deal with run-off. That includes numerous surface parking lots in the downtown core.

That needs to change, Chernushenko said.

“If you are a parking lot owner, I would say now is a good time to start looking at whether all of your surface needs to be hardened, whether you could add in some naturalization to remove some of the asphalt where it doesn’t need to be continuous,” he said.

“The city has to look at how we can recover the cost of sewage and stormwater infrastructure from such businesses as a parking lot owner.”

All of this comes after a revenue shortfall last year left a $22-million hole in the water and sewer budget.

Drinking water, sanitary and stormwater services combined were to generate $318.5 million in revenue in 2014, but the forecast used by the city treasury to draft the 2015 budget earlier this year showed that the city collected $296.7 million — a shortfall of $21.8 million.

There was also a shortfall in 2013.

But implementing a new billing structure won’t happen overnight.

City staff will plug data into the various models to see what effect each would have on low, average and high users. They’ll hold public engagement sessions in the fall to get feedback on the various models before ultimately recommending one to council in early 2016.

If those hurdles are crossed, the new billing structure would be in place in 2017.

Comments

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the "X" in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.